Alex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Hansard source

It was former Prime Minister Paul Keating. It was his view that we cannot pretend we can go on spending as though nothing has happened. Even Paul Keating suggests that the world has trimmed us down and we have to make cuts. We have to be honest with the Australian people about our budgetary challenge. Let us be honest, shadow Treasurer, about the budgetary challenge facing us today. Let us talk about the taxation of tobacco, the principal savings measure you are using to fund your education programs.

Let us go to some of the best economists, the brightest minds, and ask them about their views on using increased tobacco taxes to fund $37 billion of recurrent funding in education. Let's ask economists. Let's ask people out there. Here are some quotes for you of the Labor Party, including the shadow Treasurer's use of increasing the tobacco excise to fund ongoing expenditure on education. The Grattan Institute's John Daley said:

Tobacco excise is a structurally declining tax base.

I do not think that should be a news flash to anyone over there.

It is not going to keep pace with inflation because tobacco use is falling.

The Grattan Institute would have it right, that it is structural and falling. But it gets a little better than this.

Stephen Koukoulas, someone you might know of, over there—another true believer, in the model of Keating—is a former adviser to Prime Minister Julia Gillard. He is not a right-wing economist. He said:

If the number of packets sold falls at a faster rate than the price increases, you won't quite get the revenue effect you were hoping for.

He is a mate of yours. You cannot have it both ways, shadow Treasurer. This cannot be a health measure that is designed to bring down the rates of smoking and a recurrent funding measure for your education policies. You know that.

Everyone on your crossbench knows that. Everyone I am looking at, right now, knows that using tobacco excise is lazy, is not going to work and will not fund the massive increase in expenditure that you are putting forward to the Australian people. It goes further. RMIT University economics professor Sinclair Davidson, who has researched the impacts of this, said:

At some point it's going to reduce and not fund a growing area like education.

It does not really matter who you go to. Budget expert Stephen Anthony, an economist at Industry Super Australia, questioned the mix of policy objectives behind the move:

We want to tax tobacco so heavily that its consumption in this country will fall," he said. "Therefore this revenue should not then be relied upon to fund longer-term spending commitments."

It does not matter who you go to, on what side of the economic fence they fall. They are all united in saying that this is not a way to fund recurrent education funding of the future. It will not work. It will not meet the amounts that the shadow Treasurer is talking about.

The shadow Treasurer has the hide to come in here and say, simply, 'Spend more money. Let the money flow,' to paraphrase him. Let whose money flow, shadow Treasurer? You are talking about the Australian people's money. You are talking about money the Commonwealth does not have. If you do not have a plan to fund your education for the future, you have nothing. You have come to the Australian people and said, 'We want to reduce smoking in Australia. We want to eliminate smoking in Australia. We want it to fall. We want the revenue to fall. But we are going to use it to fund our children's future.' That is the whole basis of your education policy.

If you believe that is sustainable, let's go doorknocking and explain it to the Australian people in your electorate, McMahon, or anywhere else you decide to run after this redistribution. Let's go down and tell them that you are funding our kids' futures on an increase in the tobacco excise, which you hope will fall. It is completely unsustainable—like every Labor policy proposal put forward. It certainly is not the year of big ideas. It is not a big idea to increase the tobacco excise. It is not a sustainable way to fund our children's futures. It is, simply, another thought bubble from the shadow Treasurer.

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